Lawmakers say the companies inflated revenue through their accounting for swapping space on the other's networks, adding to surges in share prices. When demand for phone services fell in 2001, the stocks tumbled and former employees said Global Crossing used the transactions to mask slowing growth. The company filed for bankruptcy, and Qwest is restating $1.4 billion in sales.

"There's crisis at the management level," Rep. Jim Greenwood, a Pennsylvania Republican, said at the hearing. "There's direction to keep mum, there's bullish guidance to the public."

Winnick also said he will use $25 million of his money to compensate employees for losses in the 401(k) plan at Global Crossing.

A memo released by the panel yesterday showed that then-Chief Executive Leo Hindery told Winnick in 2000 that Global Crossing, which filed for Chapter 11 protection in January, may collapse.

Winnick and Nacchio were among 11 current and former Qwest and Global Crossing employees appearing at the hearing as lawmakers investigate allegations they misled investors by inflating sales, and that they profited from stock sales.

"To my knowledge, every purchase of capacity by Qwest was with the intent of furthering the company's business plan," Nacchio testified.

Qwest is the biggest local-phone company in 14 Western U.S. states and is seeking to sell long-distance service in many of those states.

Qwest has said its accounting for capacity sales was based on the advice of Arthur Andersen LLP, the company's auditor until it was replaced by KPMG LLP in May.

Lawmakers also asked the executives about their sales of hundreds of millions of dollars of company stock.

Winnick sold shares worth at least $500 million since Global Crossing's initial stock sale in 1998. Nacchio, who was replaced by Richard Notebaert as Qwest's CEO in June, sold at least $250 million of the company's shares after he was hired by Philip Anschutz in 1997.